Everything You Need To Know About Life Insurance
In this article, we will discuss everything that you need to know about life insurance, the types of life insurance and what is life insurance in general. Without further ado, let’s start first by identifying the two major types of life insurance that you can get:
The two major types of life insurance
There are a couple of main forms of life insurance, term insurance along with whole life insurance. Whole life insurance may also be referred to as long term life insurance, and it includes a number of subcategories, which will be enumerated below:
- Traditional whole life
- Universal life
- Variable life
- Variable universal life
According to statistics provided by the American Council of Life Insurers, 4.3 million life insurance policies bought were term insurance, while 6.4 million are whole life insurance.
- Term Insurance
Term Insurance is definitely the most basic type of life insurance coverage. It only provides payment after the insured passed away, throughout the term of the insurance policy, which currently range from 1 – 30 years. The majority of term insurance policies do not have additional benefit conditions.
There are a couple of primary kinds of term life insurance plans. They are known as level term as well as decreasing term. Level term insurance implies that the death reward remains exactly the same through the entire length of the insurance plan. On the other hand, decreasing term will mean that the death benefit declines, generally in one-year installments, during the period of the policy.
- Whole life insurance or permanent insurance
Whole life or permanent insurance compensates a death benefit in the event that you pass away, with no term years. This means that even if you live to an old age, even 100 years or beyond, you will still get benefits if you get this type of life insurance. There are 3 main kinds of whole life insurance or long term life insurance, which are already previously mentioned in this article. They are universal life insurance, traditional whole life, and variable universal life.
Back in 2003, 97 percent of all the term life insurance plan purchased was level term insurance. Next, we will discuss the traditional life insurance policy, which is a type of insurance.
Traditional life insurance policy
In traditional whole life insurance, the benefits that will be given and the insurance premium will not change in the duration of the insurance plan.
The insurance provider might demand an insurance rate that grows every year, but that will make it very difficult for many people to pay for life insurance coverage at a very old age. Therefore, the insurance company preserves the premium amount by billing an insurance premium that is greater than normal. The insurance company makes an investment out of the money and then adding it to the insurance premium at later years when it is supposed to increase. This way, the insurance premium will not increase ever at the entire duration of the insurance policy.
As required by law, whenever these “overpayments” get to a specific total, they have to be accessible to the insured, which will be given back to them in case they decided to cancel or move to a different plan. This benefit is only an option and not a supplemental benefit within the insurance policy.